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What is Credit? What Affects your Credit Record?

By Edited Jun 16, 2016 1 0

Simple Steps to Improve your Credit and the Changes of Getting Cheaper Credit

Credit is simply the money you borrow to buy the things you want or need, or to pay for services. The amount and interest you will pay is determined by the trust that the lender places on you; if you are considered high risk is because you have a bad credit or are considered not reliable enough to repay the debt; in this case you will find difficult to get a loan to buy a house or even a credit card; even if you do get it, the interest rates tend to be much higher; the good news is that there are simple things you can do to boots the changes of getting cheaper credit.

 

7 Most Common Forms of Credit

  1. Mortgages
  2. Credit Cards
  3. Home Loans
  4. Student Loans
  5. Car Loans
  6. Commercial Loans
  7. Debt Consolidation Loan

 

5 Simple Tips to Boots your Credit and Get Cheaper Credit

There are simple things you can do to improve your credit record and avoid problems when applying for a mortgage or credit card; some of them will boots your credit almost immediately but others will build the trust slowly.

1.    Check your credit file before applying for a loan

If you are planning to buy a house, apply for a new loan or credit card; it is always good to review your credit file in order to confirm that all the details and information recorded is correct; it is also the perfect way to find out if you have been the victim of identity theft. Don’t expect to be rejected by a credit card company; do it before; otherwise the record will stay in your file for a certain period of time. There are plenty of companies that will offer this service for just a few dollars.

 

2.    Voter Registration

This is a requirement in many countries; however, if you don’t believe in politics and are frustrated with your current government, you need to register for yourself and the chances of improving your credit file. This is one of the most important elements in a credit check; lenders will always check if you are register to vote; you don’t even need to vote but you should get on the electoral roll straight away.

 

3.    Don’t pay your credit card in full

First of all: if you don’t have a credit card at the moment, do apply for one. You might not have a bad credit history because you don’t have a credit history at all. A credit card is the simplest form of credit to apply for; it is also the most likely to get accepted if you do your homework before (read points 1, 2 and 5). Another important tip is to leave a small balance unpaid in your account; this will start building your credit history.

 

4.    Do pay at least the minimum payment on your Credit Card

Although it is good to leave a small balance in your credit card, make you to pay at least the minimum amount required by your lender; if you don’t, you might be seen as an untrustworthy client and get rejected the next time you apply for a loan; also, if you miss one payment, this will normally stay in your file for at least one year, some companies might review the last two years.

 

5.    Stability in your Life

Lenders like to see you have a stable life in terms of jobs, house and bank accounts. If you have changed your job, home address and bank account provider within the last two years it will be harder to get approved. If you have a big change coming up, do apply for the loan before.

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